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 Sara Gould advises: Self-Employed ≠ Going It Alone
Owning your own business can be very rewarding, both personally and financially. It can also be overwhelming to be the sole decision-maker for such an important undertaking. I understand how this can keep you up at night - my accounting practice was once a small partnership before joining the multi-practice firm of DMLO.
But this is supposed to be about you! How can you make all the right choices now, when the consequences are somewhere in the future and not easy to foresee? Let me give you some general comments to help you think through your particular situation. Then you will need to work with your trusted advisors to refine your decisions and put them to work for you.
Your advisor's job is to see into the future to help you minimize the tax burden on your hard-earned income. First we can help you decide whether to incorporate your business or organize as a limited liability company. Then we can help you by identifying and maximizing business deductions, providing guidance on substantiation of expenses, and pointing out tax planning alternatives that are uniquely available to the self-employed.
There are several frequently overlooked business deductions that may work for you. With just the right planning, you can take advantage of tax deductions for your car, your home, travel, entertainment and health care costs. You can claim certain tax benefits when you purchase new equipment. In addition, there are multiple benefits when you employ your spouse, child, or other family member in the business.
You should be aware that certain choices are significant to the IRS. One such decision is whether to operate by hiring employees or by using independent contractors. You may face a thorough investigation by the IRS to confirm that you are operating within their strict guidelines. If you hire employees, you are required to withhold income and employment taxes from your employees' income. However, if your workers are independent contractors, you are only required to report payments of $600 or more on a Form 1099-MISC (Miscellaneous Income). Whichever method you decide, do not be lax about IRS requirements. It could cost you money.
You may be saying, "There are so many options, how can I know what to do?"
Remember, you don't have to do this alone. There are complex rules and calculations involved in many of the planning opportunities available to you. Be sure you handle your tax planning well so in the murky future you get the best results.
We will be happy to review your overall tax scenario to maximize your profits and lower your taxes. Please contact our office at 502-426-9660 to make an appointment.
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